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The Difference Between Lean and Agile Manufacturing

Have you ever wondered what is the difference between Lean and Agile Manufacturing? Well you’re not alone. I’ve been in rooms full of manufacturing consultants who don’t have a complete grasp of these two manufacturing principles, their applications, and their differences.

One simple way to explain the difference is by thinking of the two in terms of direction and magnitude. If its a question of direction, its in the Agile arena. If its a question of magnitude, its Lean. I’ll use a golf analogy to simplify this concept even further. I’m no golf expert but I do understand two things, you need to hit the ball in the right direction and the right distance. Business, especially manufacturing, is no different. The Lean question in golf would be: “What is the least amount of effort needed to hit the ball 300 yards?”. The Agile question in golf would be: 1) “What is the right direction to hit the ball?” and 2) “What is the least amount of effort required to adjust my direction?”

In the manufacturing environment, the two work hand and hand. You first decide what to make, then you decide how to make it better and more efficiently. In an environment where the “What to make?” question is asked more frequently, Agile is the predominant approach. Likewise, if the question is more frequently “How do we make it better/faster/less expensive?”, then you’re in the Lean wheelhouse. If you’ve decided what to make over breakfast and need to figure out how to cut operating cost by 50% by lunchtime, then you’ve ventured into the Leagile territory.

Simply put, the easier it is for your factory or supply chain to change directions, the more Agile it is. The less resources required to produce a unit at quality, the more Lean it is.

Examples of Lean questions include:

What’s the lowest possible cost to produce per unit?

How much labor is required to produce per unit?

How can we reduce operating costs by 15%?

How can we improve service levels by 10%?

Examples of Agile questions include:

Are our factories capable of producing Product XYZ?

What would it cost to re-tool and get to full rate on Product XYZ?

What would it cost to add Feature or Component B to existing Product 123? How long would it take to get this new SKU to full rate production?

How quickly can we get to market with Product XYZ?

What products can we introduce to increase annual revenues by 15%? What are the associated commercialization costs?

If you’re a manufacturer that is happy with sales volumes and just need to reduce operating costs or increase productivity, then there are steps you can take to become more Lean, which is the systematic reduction of waste.

On the other hand, if you’re a manufacturer that would like to increase or retain sales volumes by being more responsive and flexible, then there are steps you can take to become more Agile, which is the ability to quickly and easily change direction or speed.